BIOTECH: Isis is just getting going

It's profitable, has large drug 'pipeline' and $652 million cash

CARLSBAD -- When Stanley T. Crooke addressed shareholders of
Isis Pharmaceuticals Inc. at last week's annual meeting, he said
something almost unheard-of from biotechnology company CEOs -- Isis
expects this year to be profitable, like last year.

Perhaps even more important, Crooke said Isis can fund itself
from now on. That means no more stock offerings, which dilute the
value of shares owned by existing investors.

"We don't believe there's going to be a need for us to come back
to Wall Street selling any more stock," Crooke said Tuesday to an
audience of about 200.

Over the years, Isis has maintained a furious pace of forming
partnerships, spinning off companies formed with technology Isis
developed, and licensing potential drugs to partners.

The money raised from this activity has given Isis a financial
position most biotechs can only dream of, and the promise of much
more. As of March 31, the company had $652 million in cash and
short-term investments on hand.

That cash position includes proceeds from the sale of its Ibis
Biosciences subsidiary to Abbott Laboratories. Abbott, which had
already paid Isis $40 million for a stake in Ibis, spent $175
million in the first quarter to buy the rest.

Isis' value, or market capitalization in financial jargon, is
now about $1.5 billion. Crooke said that value will soar if Isis
continues reaping money from its numerous alliances with big
pharmaceutical companies and other biotechs to develop new
drugs.

In other words, the big payoff investors have long waited for is
nearly here.

Realizing its promise

Many biotech CEOs have said similarly optimistic things, of
course, often to be proven wrong. And Isis has had severe setbacks
with promising drugs over its 20-year history.

Just one Isis drug has been approved for sale, to treat an
AIDS-related viral infection called CMV that can cause blindness.
The drug, Vitravene, is no longer sold because better AIDS
therapies have eliminated the market.

Several years ago, Isis faced challenges in the scientific
community from skeptics who claimed Vitravene was a fluke, and that
Isis' technology, a gene-blocking method called "antisense," didn't
really work.

A January, 2004 article in the online journal PLoS Biology said
antisense drugs provoked a generalized immune response that
stimulated the body to fight off infectious diseases and cancer. If
so, Isis' theory that antisense could be used to precisely target
specific diseases was false.

Isis denied that was the case, and kept on working on antisense.
And in the last few years, Isis has begun delivering.

Isis is testing nearly 20 drugs, some alone and some with
partners. That's a large number for a biotech with fewer than 300
employees. Most biotechs have just a handful of drugs in testing.
Isis' partners bear most of the cost of testing these drugs.

Joint ventures

Isis has also established several joint ventures and spin-offs
such as Ibis Biosciences. They include Regulus Therapeutics, a
Carlsbad-based joint venture between Isis and Anylam
Pharmaceuticals Inc.; and Altair Therapeutics, a Carmel
Valley-based spinoff of Isis that is developing an inhaled drug for
asthma.